NORTEL'S NEW CEO VOWS TO JUMP-START COMPANY

Of all the challenges faced by Mike Zafirovski as the new CEO of Nortel, one of the biggest will be deciding exactly which markets the company wants to compete in. Zafirovski, who left Motorola as the president and chief operating officer in January, one year after Ed Zander was named CEO, was tabbed as the next president and CEO of Nortel, capping what has been a tumultuous 18-month stretch for the company.

At a press conference to announce his appointment, Zafirovski, who spent 15 years at GE before joining Motorola, said he planned to take the company to the next level and was unusually specific in several areas for someone that won't officially be on the job until mid-November.

Among his initial concerns are Nortel's margins, which have been hovering in the low-double digit range. In addition, Zafirovski appeared to make no secret that a company with slightly more than $2 billion in quarterly earnings shouldn't be spending $1.8 billion annually in research and development.

“I love to compete, and if you're going to compete, you might as well play to win,” he said.

Perhaps most perplexing, though, will be figuring out which of the myriad of markets in which the company will stay. In one of its traditional markets, switching, Nortel has been faced with not only increased competition but with an environment that has been rapidly moving to softswitches and routers. In that market, the company is the No. 3 vendor with around 15% share in the latest reported quarter, behind Cisco Systems and Juniper, according to statistics from Dittberner Associates. Those numbers, however, only include Cisco and Juniper routers.

The rural telco market, where Nortel at one time held a near monopoly on switching, also is one in which the company has been dealing with more competition.

Zafirovski indicated that the company likely will become leaner and more focused but didn't mention any specifics.

“The company has to have a very solid foundation to move forward,” he said. “I'll be doing lots of listening and learning over the first several months.”

Zafirovski's tenure at Motorola was star-crossed. He won praise from Wall Street analysts for turning around the company handset business over the last decade and looked in line to succeed Motorola scion and CEO Chris Galvin, when Galvin stepped down from his post in December 2003. The company opted to go with an outsider, Zander, in an attempt to re-shape market perceptions.